"Consumers need to be able to anticipate and avoid unnecessary fees on their checking accounts. But we are concerned that overdraft programs at some banks may be increasing consumer costs," CFPB Director Richard Cordray said. "What is often marketed as overdraft protection may actually be putting consumers at greater risk of harm."

A consumer can trigger an overdraft by spending or withdrawing more money from their checking accounts than is available. If the bank covers the payments with an advance, it charges a fixed overdraft fee for doing so. The institution can also choose to return the payment and charge a non-sufficient fund fee. Automated systems now make decisions for most banks.

Last year's $32 billion in overdraft fees was a $400 million jump from 2011 according to a recent study by Moebs Services . This 1.3% increase came almost entirely from a greater number of overdrafts rather than an increase in the price of the fee. Overdraft volume during the first quarter of last year actually fell to an 11-year low, but the number of overdraft transactions during the last nine months of the year rose 4.4%.

In July 2010, the Federal Reserve required banks to get permission from each checking account customer before the bank provided overdraft protection for ATM and debit card transactions. If consumers did not "opt in" for this coverage, debit card transactions made at store level or withdrawals from an ATM for an amount greater than the account's balance would be denied and no overdraft fee could be charged. The CFPB shows that in 2011, more than 40% of all new customers opted in for overdraft protection.

There are additional consequences for consumers who opt in, while heavy overdrafters who opted out reduced their fees by more than $450 in the second half of 2010. Consumers who opt in are more likely to end up with involuntary account closures -- the CFPB found that some banks had involuntary closure rates that were more than 2.5 times higher for accounts that had opted in to debit and ATM overdraft coverage.

The CFPB study also shows that it is difficult to compare overdraft costs by bank because the policies are complex and different. Banks post transactions in a different order, which can affect the number of transactions that trigger an overdraft fee. Overdraft coverage limits and fee structure also varies by institution. For example, some banks charge only overdraft fees for transactions that overdraw the account by more than $5, while other banks charge fees on every overdraft transaction regardless of the size.